strategy Flashcards
three ways to define strategy
chandler: objectives and goals
porter: unique mix of values
mintzberg: pattern in stream of decisions
what is strategy general
long term direction of orga process od outcome horizon one: extend and defend core business horizon two: emerge new business horizon three: create value options
mintzbergs 5 Ps
plan (plan in advance)
ploy ( specific manoevre to outwit competitor)
pattern (reallife strategy what cjsnges in execution)
position (choose important view)
perspective (divide organisation in internal and external)
levels of strategy
coporation-what business are we in what scope
business - how do we compete
operational - how do we support our business strategies
external analysis parts
pestel do divide organisations environment
five forces for market attractivness
for competitors strategic groups, segments
for organisation strategic capabilities
pestel
politcal (government constraints, trade restriction, taxation)
ecological (climate change)
social (culture, norms, attitudes)
technology (innovation, infrastructure)
economic (unemployment rates, interest rates, personell income, growth rates)
legal
five forces categories
threat of new entrants
threat of substitutes
bargaining power of supplier
bargaining power of buyer
threat of new entrants
undifferentiated product customer loyality and switching costs economy of scale and network effects distribution channel access capital requirments
threat of substitute
low switching costs
adequate price performance ratio
bargaining power of supplier
low concentration
highly differentiated product
few subsitutes
bargaining power of buyer
low buyer concentration
many substitutes
loe switching costs
rivalry (fice forces)
high when low market growth
many competitors
high exit barriers
issues of five forces
difficult to define market with overlapping or complementory markets
industry life cycle
developement: low rivalry, high growth, weak buyers
growth: low rivalry some entry barriers
shake out: increasing rivalry, slower growth, sole exists
majurity: low growth, high entrance barrier, standard products
decline: no growth, exits and price competition
relevant market
narrow for tacticsl decisions like marekt share
broad for strategic decisions to discover market segments with growth opportunities or possible new entrants
relevent market competitor and customer defined
competitor defined:
production costs, technology, distribution channels
customer defined:
customers needs, substitutes
strategic groups
resource based: quality and effort scope based: product range and geographical scope according to strategic behaviour
steps of strategic groups
- select companies
- determine criteria
- form groups
- select companies
internal analysis
strategic capabilties vrio supply chain analysis strategic priority analysis competitive advantage swot
strategic capabilities
resources thst company owns
competencies to use those
vrio
value
rarity
inimitability
organisational support
value chain
primary activities: in and outbound logistics, marketing, services, operations
secondary: hr, technology, infrastructure
strategic priority analysis
see how much budget into activity how important is activity for strategy
how does it perform
identifying competitive advantage
- what do better
- what is the source for this advantage
- are these activities vrio
swot
combination of strength and weaknesses from internal analysis and opportunities and threats from external analysis
market vs resource based view
market: assess market select market strategy formulation deploy needed resources
resource based:
strength and weaknesses
identify competitive advantage and industry where you are rewarded for it
identify competitive advantage you need in that industry
strategy formulation
strategic taxonomies
economy of scale
economy of scope
experience curve
economies of scale
the bigger production volume the cheaper production through: -cost spreading -specialisation of labour and technology -increasing bargaining power
diseconomies of scale
- physical limitations (increases machine breakdown)
- specialisation demotivates workers
- increases distance to market
- managerial diseconomies
economie of scope
production of product A supports production of product B —syergies between business units -share resources -pool negotiation power -coordinate strategies
experience curve
with each doubling in production volume the unit price decreases of 15% -learning effect in labour -economies of scale -technology improvement impact on strategic management: -cost advantages -increase market share and ROI
generic strategies
cost leader
cost focus
differentiator
differentiation focus
cost leader and cost focus
leader:
low costs, target whole market, increase market share for economies of scale
mistake:
focus to much on costs and not market changes
focus:
only target one segment
differentiator vs differentiation focus
high degree of differentiation focus on whole market, no economies of scale or scope, focus on innovation an price premium
problem: customers do not value uniqueness and do not pay
focus:
only one wegment, understand high purchasing power
ansoff matrix
-market penetration:
old product increase market share by convincing customer to higher frequency of use or quantity of product
-new products:
product innovation, improvment or product line extension, old market, cross selling
-market developement
new geogrpahical market with old product
-conglomerate diversification
new market and new product rather related or unrelated to old market, economies of scope for related market
corporate rationals
portfolio manager: focus downwards, invest into business units
synergie manager: across, share strategy and production plants
parental developer: downwards, do not share but hand down parental competencies
bcg matrix
market share and market growth
cash cow: high share low growth (further liquidity)
stars: high share high growth (invest)
dogs: low share low growth (withdraw products)
question marks: high growth low share (high investment)
mckinsey portfolio
9 variables on two axes market attractivness -market quality -competition intensity -entry barriers -raw material -environmental situation -market growth competitve position -market position -quality of employees -quality of systems -production potential -r and d potential
